The Epstein-Barr virus latent membrane protein 1 (LMP1) is pivotal in the transforming activity of this virus. We found that the common LMP1-95-8 variant interacts with Homologue of Slimb (HOS), a receptor for the SCFHOS/betaTrCP ubiquitin-protein isopeptide ligase (E3) via one canonical and one cryptic HOS recognition site. These sites are mutated or deleted in the tumor-derived LMP1-Cao variant, which did not bind to HOS. Mutations within these sites on LMP1-95-8 abrogated HOS binding and increased transforming activity of LMP1. HOS did not regulate stability of LMP1-95-8 unless it was mutated to bear additional lysine residues near the cryptic motif. LMP1 proteins that could not bind to HOS exhibited an increased ability to induce IkappaB degradation and NF-kappaB-mediated transcription without further increase in activation of IkappaB kinases. Expression of LMP1-95-8 reduced the levels of endogenous HOS available to interact with phosphorylated IkappaBalpha. Degradation of IkappaBalpha and dose dependence of NF-kappaB activation by LMP1-95-8 were promoted by co-expression of HOS. Our data suggest that LMP1-95-8 is a pseudo-substrate of SCFHOS/betaTrCP E3 ubiquitin ligase and that interaction between LMP1 and HOS restricts the extent of LMP1-induced NF-kappaB signaling. We discuss the potential role of this mechanism in transforming and cytostatic effects of LMP1 variants in cells and Epstein-Barr virus-associated tumors.